Futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) are pointed higher this morning, despite the U.S. being hours away from maxing out its borrowing authority. Investors are cautiously optimistic that congressional leaders will hammer out a resolution to avoid the risk of default. The Senate is slated to resume negotiations at noon. Meanwhile, Fitch Ratings announced last night that it has put the country's 'AAA' credit rating on watch amid the inaction in Washington. Elsewhere, "The 10-year yields closed above the key 2.7% level yesterday," said Schaeffer's Senior Equity Analyst Bryan Sapp. "I'll be watching this closely, as a U.S. default will likely spur a big spike in bond yields."
On the earnings front, Bank of America Corp (NYSE:BAC), Yahoo! Inc. (NASDAQ:YHOO), and PepsiCo, Inc. (NYSE:PEP) are among the notable names that should garner some attention following the release of their respective results.
Futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) are roughly 62 points above breakeven.
The Chicago Board Options Exchange (CBOE) saw 1,076,966 call contracts traded on Tuesday, compared to 711,160 put contracts. The resultant single-session put/call ratio rose to 0.66, while the 21-day moving average edged higher to 0.63.
From the Trading Floor
"Anecdotally, I'm seeing a lot of 'buy the rumor, sell the news' talk about a potential deal," noted Sapp. "The general consensus seems to be that Congress will get something done before tomorrow's deadline, but you should be selling into that. Typically, when everyone agrees on something, it's not right. Should they get something done before the default, I would look for a more prolonged rally than everyone is expecting. Contrarily -- in the (unlikely) event that lawmakers do allow a default -- the markets would most likely get hammered, given the expectations that a resolution will be reached."
Currencies and Commodities
Earnings and Economic Data
Slated for release today is the NAHB/Wells Fargo housing market index and the Federal Reserve's Beige Book. Making an appearance in the earnings confessional are American Express (AXP), International Business Machines (IBM), BAC, eBay (EBAY), PEP, Abbott Laboratories (ABT), Bank of New York Mellon (BK), BlackRock (BLK), Comerica (CMA), Crown Holdings (CCK), KeyCorp (KEY), Kinder Morgan Energy (KMP), Mattel (MAT), MGIC Investment Corp. (MTG), Noble Corporation (NE), Northern Trust (NTRS), PNC Financial Services (PNC), SanDisk (SNDK), Select Comfort (SCSS), Stanley Black & Decker (SWK), Steel Dynamics (STLD), St. Jude Medical (STJ), United Rentals (URI), U.S. Bancorp (USB), Winnebago Industries (WGO), and Xilinx (XLNX).
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